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TMI Blog2004 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of law under section 256(1) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), for the opinion of this court. "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that the income of the assessee-co-operative society from a cold storage was exempt under the provisions of section 80P(2)(e) of the Income-tax Act, 1961?" Briefly stated the facts giving rise to the present reference are as follows: The respondent, namely, M/s. District Co-operative Federation, Bulandshar, is a co-operative society. The present reference relates to the year 1979-80. It had originally filed the return on June 28, 1979, showing a total income of Rs. 73,630. However, it revised its return on February 16, 1982, showing a total loss of Rs. 1,02,240. In the course of assessment proceedings it also filed a letter dated November 29, 1982, claiming deduction of Rs. 24,960 under section 80P(2)(a)(ii) in respect of brick kiln business claiming it to be a cottage industry thereby increasing the returned loss to Rs. 1,27,200. It may be mentioned here that along with the revised return the respondent had filed a letter cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety Ltd. [1986] 162 ITR 142 (Guj); (4) CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117 (SC); and (5) Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814 (SC). Having heard learned counsel for the parties we find that the respondent which is a co-operative society derived income during the relevant assessment year from cold storage. Section 80P(2)(e) of the Act provides for deduction of income derived by a co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities which reads as follows: "80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: - . . . (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wentieth Century Dictionary, "godown" means a warehouse and "warehouse" means a building where wares, or goods, are stored, before being distributed to retailers, a storehouse: In Stroud's Judicial Dictionary (Volume 5, forth edition), we find the following observation: "A 'warehouse', in common parlance, certainly means a place where a man stores or keeps his goods which are not immediately wanted for sale". In Black's Law Dictionary (fifth edition), "warehouse" has been described as a "structure used for the reception and storage of goods and merchandise". It further states that "the term may include any structure used to hold goods, stores or wares temporarily or for a length of time". Aiyar's Judicial Dictionary (ninth edition), defines "godown" as a storage, or warehouse. According to that dictionary, a "warehouse" is a place licensed for the storage of goods. Halsbury's Laws of England (fourth edition), Note 3 to paragraph 428, on page 204, reads as under: " 'warehouse' means a place used for the storage of goods, even temporarily, as in a dock transit shed: A storage place which is ancillary to a business which is wholly or substantially retail is not a warehouse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve society must have income from letting of godowns or warehouses; and (iii) the godowns or warehouses must be let for any one or more of the three purposes, namely, storage, processing or facilitating the marketing of commodities. The Legislature advisedly used the words "godowns or warehouses" because the intention was to encourage co-operative societies to construct godowns and warehouses which would prove useful for the rural economy. Literal interpretation of the words "godowns or warehouses" will not lead to any absurdity or produce any manifestly unjust result. The dictionary meanings of "godowns and warehouses" show that both these terms are synonymous and interchangeable. The common parlance meaning which can be attributed to "godowns or warehouses" is that they must be used for the purpose of storage of goods even for a temporary period. The expression "facilitating the marketing of commodities" would suggest a stage anterior to the actual sale of the commodity. In the case of South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117, the apex court has held that the provisions for exemption under section 14(3)(iv) of the Indian Income-tax Act, 1922, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(7)(c) of the Finance Act, 1973. The apex court has overruled the decision of this court in the case of Addl. CIT v. Farrukhabad Cold Storage P. Ltd. [1977] 107 ITR 816 and that of the Calcutta High Court in the case of Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 which had held that processing takes place in a cold storage. Thus from the dictionary meaning as also from the decisions of the Calcutta High Court in Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 and the apex court in Delhi Cold Storage P. Ltd. [1991] 191 ITR 656 it is established that in a cold storage, vegetables, fruits and several other articles are stored. Giving a liberal interpretation to the provisions of section 80P(2)(e) of the Act, it can be treated as a warehouse or godown where fixed temperature is maintained. Thus giving a liberal interpretation of the words "godowns and warehouses" mentioned in section 80P(2)(e) of the Act, a cold storage can be said to be warehouse or godown where goods are stored and thus it falls under the aforesaid section. In this view of the matter, the income from cold storage would be exempt. In view of the foregoing discussions, we answer the question referre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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